US Default on Debt: Why Congress Must Raise the Debt Ceiling

The US government shutdown that went into effect on October 1, 2013 (day one of Fiscal Year 2014) is bad enough, with regular services and operations suspended and all non-essential personnel furloughed. What is worse, however, would be if the US Congress fails to raise the "Debt Ceiling" on (or before) October 17, 2013.

What is the Debt Ceiling? 

The New York Times and BBC both have great bullet-point articles on the Debt Ceiling. The main gist is this: 

• The Debt Ceiling is the limit on how much money the government can borrow by issuing bonds and securities.
• The President proposes a budget, Congress amends it as they see fit and they pass it back to the President to sign into law. The government routinely passes spending bills without consideration of how they are funded, and as a result the US federal government has had to borrow money to cover the budget deficit every year since FY 1940 with the exception of the 12 fiscal years (that's 12 out of 73 years, or 16% of the time) when the government actually had no deficit/ran a surplus. 
• The other 61 fiscal years between 1940 and 2013, the government ran a deficit. To finance operations the Treasury continually sells Treasury Bonds and Securities (debt) to investors. The US government is responsible for interest payments on those bonds, and repayment of the principal value of the bond when it matures. Technically, the government can keep selling bonds to cover the amount it already owes in order to cover the expense of paying interest and mature bonds. This amount aggregates over time and has become the US National Debt, which as of Oct 4, 2013 stands at $16.7 trillion.
• Raising the Debt Ceiling authorizes the government to issue more bonds to pay the money it already owes-- namely interest payments and principal on bonds and securities it has issued. The Debt Ceiling has been raised almost every year (on average) since 1940 with no problem-- until certain members of Congress were elected in 2010. 
• The US Constitution requires the government to pay its debts, so a default would be unconstitutional, on top of having horrifying consequences in the US and abroad.
• According to the Congressional Budget Office, debt management options will run out sometime between October 22 - October 31 if the debt limit is not raised on or before October 17, 2013.

Since 1940, Congress has raised the Debt Ceiling 82 times.*

*The Debt Ceiling was reduced only a handful of times out of approximately 92 adjustments since 1917.

Raising the Debt Ceiling is necessary to make the payments that the US government has already promised. It has no effect on actual budgetary concerns unless Congress fails to raise it. If that happens, the US will default on its debt within 14 days, credit agencies will downgrade the US government's rating (remember what happened in August 2011 when Congress threatened to not raise the Debt Ceiling?) and investors who buy Treasury Bonds and Securities will demand higher interest payments.

Right now interest on US Bonds is so low that an investor is practically paying the US government to hold his money for him because the yield rate on a 10-year bond can easily be outpaced by inflation (and even longer term bonds like 20 or 30-year bonds are paying pretty slim amounts). So issuing bonds right now to pay off the US government's previous debt obligations could actually be a very smart move.

Being forced to issue bonds at higher interest rates would mean that, while US Bonds may become a more attractive investment to people who actually want to make money instead of having a safe place to hold it, a larger portion of the federal budget would go toward paying off interest on the National Debt. That could lead to larger deficits and possibly additional defaults... and certainly would have as much, if not greater, impact than the Financial Crisis in 2008.

Remember how scared everyone was of the global impact of a debt default in Greece? ...Well, Greece is not the United States.

For more information on why the National Debt isn't really a problem (unless Congress fails to raise the Debt Ceiling), see my previous blog post "The Public Debt: A Menace to Society?"

The US created the Debt Ceiling in 1917, mostly to fund WWI, but also to cover any other borrowing the government may need to do in the future. Many other countries don't even have a "debt ceiling"-- they either just borrow whatever is necessary to cover their deficits, or they  must work within budget restrictions by appropriating funds for each initiative.

Political division has been particularly contentious during the Obama administration, with many members of Congress (mostly in the House of Representatives) effectively "holding the nation hostage" in order to delay or prevent several Obama initiatives like the Affordable Care Act, and also to push their own specific agendas that would otherwise not pass.

What Can Be Done?

It's in the hands of Congress. If you are a US citizen, you can call or write to your representatives and encourage them to raise the Debt Ceiling. Congress can raise, eliminate, or enact automatic increases to the Debt Ceiling. Any of those actions would avert a debt default. Congress could also draft new legislation that provides a framework for fiscal responsibility-- although there really isn't time for that now.

President Obama could choose to ignore the debt limit and authorize the Treasury Department to issue bonds without Congressional approval, but that would be a violation of the Second Liberty Bond Act of 1917 that created the limit. Certain members of Congress may consider that an impeachable offense. On the other hand, not raising the Debt Ceiling is effectively the same as defaulting on current debt, is unconstitutional (US Constitution, 14th Amendment, Sec. 4), and could reasonably be argued to be a matter of national security and global stability.

To avoid US debt default and avert a global financial meltdown, Congress must raise the Debt Ceiling on or before October 17, 2013.  

Supplementary:

Fiscal Years Since 1940 without US Federal Budget Deficit and the Sitting US President

Clinton

FY1998-2001 

Total Surplus (2011 dollars): $726.3 billion

Johnson

FY 1969

Total Surplus (2011 dollars): $19.5 billion

Eisenhower

FY 1960,  FY 1956-1957

Total Surplus (2011 dollars): $66.8 billion

Truman

FY 1951, FY 1947-1949

Total Surplus (2011 dollars): $244.6 billion

War on Terror: Closing Gitmo? - GD 3.1

This is a note I shared on facebook.com on December 9, 2011. The bill I originally referenced in this note (S. 1867) was not the one that passed, but a virtually identical bill originating in the House of Representatives passed -- HR. 1540 -- and became Public Law 112-81. The House version of this bill had a slightly different organization, however it includes identical verbiage on all sections mentioned in this note.
I have edited the note to reference the correct bill, and I have added hyperlinks to basically every mention of the relevant bills/laws so that you can read them for yourself over & over again.


The original (but edited & updated) note:

Commentary on [HR.1540] (a draft of NDAA for FY2012) -OR- Demand Repeal of the USA PATRIOT Act and Restore The Bill of Rights


First I'd like to point out that I'm against this bill being passed and that I've already called and written to my Congressional representatives making my stance clear. But this bill is not exactly what is being portrayed in the media and on the internet [Indefinite Detention of Terrorism Suspects].

The National Defense Authorization Act is a law that must be passed each year, as a specific authorization of how the budget will be spent at the Department of Defense. It is considered a "must-pass" piece of legislation since without it there would be a big pile of cash (which amounts to between 1/3 and 1/2 of our federal discretionary spending) that no one could touch. One way or another, Congress will pass something called "The National Defense Authorization Act of 2012" before the 112th Congress is concluded. They do it every year. True, sometimes it's called "The Department of Defense Authorization Act" or something like that.

[The bill did not reach the president's desk until Dec. 31st, 2011 - over two months into Fiscal Year 2012. Whatever objections Obama had to it - if any - had to be suspended or the military would literally cease to function. So in a way, Congress intentionally held the US military hostage over this bill.]

Every year, there are several different drafts introduced in the House of Representatives (denoted by "H.R." and followed by a 3 or 4-digit number) and the Senate (represented with an "S." followed by a 3 or 4-digit number). This year, some of those drafts (I don't know if I can find them all) are called: 

• H.R. 1540 Sponsor: Rep McKeon, Howard P. "Buck" [CA-25] (by request) (introduced 4/14/2011)
• S. 981 Sponsor: Sen Levin, Carl [MI] (by request) (introduced 5/12/2011)
• S. 1253 Sponsor: Sen Levin, Carl [MI] (introduced 6/22/2011)
• S. 1254 Sponsor: Sen Levin, Carl [MI] (introduced 6/22/2011)
• S. 1867 Sponsor: Sen Levin, Carl [MI] (introduced 11/15/2011)

One thing you have to understand about bills in the House and Senate is that they get voted down for silly reasons like the way one line reads or because certain members of Congress are bent on inconveniencing the President. Because of this, whether bills originate in the House or Senate, they are often made in multiple drafts- this is especially true of the ones which are required to be passed into law each year. One Congress member, in this case Senator Carl Levin (D-MI)- Chairman of the Senate Committee on Armed Services, submits several incredibly similar drafts in the hope that one will pass. It is unclear to me whether the good Senator actually wrote this bill or if he is in fact just "sponsoring" it. That calls into question whether he (or anyone else, for that matter) has actually even read it.

If you watch C-SPAN, you may be aware that they do in fact read aloud entire bills during sessions of Congress, which is why so many of the seats are empty. None of them wants to be caught sleeping on the job.

Sometimes bills are written by lobbyists, delivered to Congressmen, and are read in session and then voted on... Yes, even passed into law. These become public law just like any other. It's a shame and a travesty of our democratic process-- but our Congress is too busy, it seems, to write- or to even read- the laws which they pass.

Another thing you have to know about these laws is that, like the lyrics of a Steve Miller song, they are endlessly self-referential. Mostly, they read like this excerpt from S. 1253 -- 

"Sec. 315. DISCHARGE OF WASTES AT SEA GENERATED BY SHIPS OF THE ARMED FORCES.: `(F) This paragraph shall not apply during time of war or a national emergency declared by the President or Congress.'.(b) Conforming Amendments- Section 3(f) of the Act to Prevent Pollution from Ships (33 U.S.C. 1902(f)) is amended-- (1) in paragraph (1), by striking `Annex V to the Convention on or before the dates referred to in subsections (b)(2)(A) and (c)(1)' and inserting `subsection (b)'; and(2) in paragraph (2), by inserting `and subsection (b)(3)(B)(i) of this section' after `Annex V to the Convention'."

...So you have to find this previous piece of legislation and find out what they require in all of these sections-- while you pray that it has actual text and doesn't reference some earlier law which is yet another endless list of "strike this- insert that". It sucks, really. I think I understand why Congress "works" the way it does. 


HR. 1540 (also known as The NDAA of 2012)

Since this piece of legislation came to national attention, I have read and re-read it. Now that The Daily Show has done a spot on it-- I really have to make some kind of official statement [Also see Stephen Colbert's piece on the Authorization for Use of Military Force], because the people commenting on this bill don't have a clear picture of the entire situation.

Here is the specific section in question:

"Subtitle D--Detainee Matters SEC. 1021 . AFFIRMATION OF AUTHORITY OF THE ARMED FORCES OF THE UNITED STATES TO DETAIN COVERED PERSONS PURSUANT TO THE AUTHORIZATION FOR USE OF MILITARY FORCE.(a) In General.--Congress affirms that the authority of the President to use all necessary and appropriate force pursuant to the Authorization for Use of Military Force (Public Law 107-40; 50 U.S.C. 1541 note) includes the authority for the Armed Forces of the United States to detain covered persons (as defined in subsection (b)) pending disposition under the law of war. 

    (b) Covered Persons.--A covered person under this section is any person as follows: 

            (1) A person who planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored those responsible for those attacks.                                

            (2) A person who was a part of or substantially supported al-Qaeda, the Taliban, or associated forces that are engaged in hostilities against the United States or its coalition partners, including any person who has committed a belligerent act or has directly supported such hostilities in aid of such enemy forces.
    (c) Disposition Under Law of War.--The disposition of a person under the law of war as described in subsection (a) may include the following:

            (1) Detention under the law of war without trial until the end of the hostilities authorized by the Authorization for Use of Military Force. 

            (2) Trial under chapter 47A of title 10, United States Code (as amended by the Military Commissions Act of 2009 (title XVIII of Public Law 111-84)). 

            (3) Transfer for trial by an alternative court or competent tribunal having lawful jurisdiction. 

            (4) Transfer to the custody or control of the person's country of origin, any other foreign country, or any other foreign entity.

    (d) Construction.--Nothing in this section is intended to limit or expand the authority of the President or the scope of the Authorization for Use of Military Force.

    (e) Authorities.--Nothing in this section shall be construed to affect existing law or authorities relating to the detention of United States citizens, lawful resident aliens of the United States, or any other persons who are captured or arrested in the United States. 

    (f) Requirement for Briefings of Congress.--The Secretary of Defense shall regularly brief Congress regarding the application of the authority described in this section, including the organizations, entities, and individuals considered to be ``covered persons'' for  purposes of subsection (b)(2)." 

(Sec. 1021 Public Law 112-81)

Yes, it does include the text, " (1) Detention under the law of war without trial until the end of the hostilities authorized by the Authorization for Use of Military Force." 
This does NOT mean that the law of war extends into the Continental United States. 
Read "(e)" - I have put this one in bold face.



Here is the entire text of the "Authorization for Use of Military Force"  
(Public Law 107-40): 

" Public Law 107-40  

Joint Resolution

     To authorize the use of United States Armed Forces against those responsible for the recent attacks launched against the United States. <<NOTE: Sept. 18, 2001 -  [S.J. Res. 23]>> 
Whereas, on September 11, 2001, acts of treacherous violence were committed against the United States and its citizens; and 

Whereas, such acts render it both necessary and appropriate that the United States exercise its rights to self-defense and to protect United States citizens both at home and abroad; andWhereas, in light of the threat to the national security and foreign policy of the United States posed by these grave acts of violence; and 

Whereas, such acts continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States; and 

Whereas, the President has authority under the Constitution to take action to deter and prevent acts of international terrorism against the United States: Now, therefore, be it 

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, <<NOTE: Authorization for Use of Military Force. 50 USC 1541 note.>> 
SECTION 1. SHORT TITLE.
    This joint resolution may be cited as the ``Authorization for Use of Military Force''.
SEC. 2. AUTHORIZATION FOR USE OF UNITED STATES ARMED FORCES.
    (a)  <<NOTE: President.>> In General.--That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.
    (b) War Powers Resolution Requirements.-- 

            (1) Specific statutory authorization.--Consistent with section 8(a)(1) of the War Powers Resolution, the Congress declares that this section is intended to constitute specific statutory authorization within the meaning of section 5(b) of the War Powers Resolution.
[[Page 115 STAT. 225]]
            (2) Applicability of other requirements.--Nothing in this resolution supercedes any requirement of the War Powers Resolution.     Approved September 18, 2001."

So, in fact S. 1867 Sec. 1031 [HR. 1540 -- which became Public Law 112-81] "only applies" to this circumstance of the President sending troops to apprehend those responsible for 9/11. 

Nevermind that Congress basically gave the President carte blanche to make war with anyone in the world, be it "...nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons."

The President already had these powers of authority- this law is still on the books- this is one piece of hastily passed legislation that went through immediately following 9/11 ( none of which have been repealed) that actually rescind (or suspend) the Bill of Rights.

The most famous one of all is the USA PATRIOT Act (UNITING AND STRENGTHENING AMERICA BY PROVIDING APPROPRIATE TOOLS REQUIRED TO INTERCEPT AND OBSTRUCT TERRORISM) of 2001 (Public Law 107-56).

This is the law passed on October 26, 2001 that more or less suspends the Bill of Rights-  Amendments 4, 5, 6, 7, 8 -and possibly 1, 3, 9 & 10 depending on your interpretation of the law.
The USA PATRIOT Act allows government agents to enter and search your home without your knowledge or consent, sift through every communication you have made since- perhaps October 26, 2001- (be it email or web pages browsed or phone calls or text messages), to freeze (or seize) your assets and holdings, to apprehend you in secret and hold you without access to anyone- indefinitely- all because they "suspect" you *might* be a terrorist. No holds barred. Whether you are a US Citizen or a Legal Resident Alien or whether you are a foreign insurgent on a distant battlefield. It doesn't even necessarily include "those responsible for the attacks on 9/11".

What does the law say? It's a very long text, so I'll point out some parts and you can use the links to the document to read it for yourself.

Read "Title IV, Subtitle B, Sec. 411- Definitions Relating to Terrorism" -- that one is specifically for "Aliens" AND- for everyone else: "Title VIII - Strengthening Criminal Laws Against Terrorism", especially Sections 801-814. 
However I will summarize the definition of who is a terrorist, since it's rather lengthy and scattered throughout the lengthy text in rash-like blisters--

[paraphrase]: Terrorism/a terrorist act/a terrorist is defined as anyone who carries out, plans, has previous knowledge of, has provided funds directly or indirectly (whether they know or "SHOULD know" where their money went), or conceals any activity which threatens life, injury or property of US persons or residents with the aim of affecting the policy or actions of the United States government.

This is another law which almost all of Congress failed to read, and some people believe- with good reason- that it was actually written well before 9/11 and was waiting to be printed and rushed through Congress given the opportunity. It has been re-authorized and amended in countless ways since then. I have not read all of the new parts.

Bush's Executive Order defining what terrorism actually is:

Executive Order 13224 (September 23, 2001)

“Sec. 3. For purposes of this order:(a) the term "person" means an individual or entity;(b) the term "entity" means a partnership, association, corporation, or other organization, group, or subgroup;(c) the term "United States person" means any United States citizen, permanent resident alien, entity organized under the laws of the United States (including foreign branches), or any person in the United States; and(d) the term "terrorism" means an activity that --(i) involves a violent act or an act dangerous to human life, property, or infrastructure; and(ii) appears to be intended --(A) to intimidate or coerce a civilian population;(B) to influence the policy of a government by intimidation or coercion; or(C) to affect the conduct of a government by mass destruction, assassination, kidnapping, or hostage-taking.” 

[http://www.state.gov/j/ct/rls/other/des/122570.htm]

Hmm. It really depends on who's asking the question, "Who is a terrorist?" doesn't it?
What if Afghanistan or Iraq were to ask this question? Who would they determine the terrorist is, really? 
Perhaps the United States.

Our commitment to Bush's foreign policy and rejection of international law has set us up for increasingly contradictory and complicated lawmaking- and has made our country quite officially a hypocrisy and a contradiction in terms. Our unilateral action creates a self-perpetuation/self fulfilling prophecy of terrorist activity the world over. 

Terrorist activity in other countries is treated as a crime: Bush over-reacted to the events of 9/11 and upended international order. The only reason his actions have been allowed in the international community (with a considerable amount of grimacing) is that it is we- the United States- are the single greatest military power of our time. No one can enforce international law against us but ourselves. 

So, back to HR. 1540. This bill actually limits the scope of persons who can be detained. It attempts to define who are to be considered "enemy combatants" and where those combatants can be held, by informing us that they are required to be handled just like any POW- held "... under the law of war without trial until the end of the hostilities authorized by the Authorization for Use of Military Force." Also, it implies that US Citizens must still be charged and tried in the civilian criminal court system.
I think Senator John McCain, a former POW and torture victim, supports this bill because it requires persons detained under suspicion of being terrorists to be handled under the law of war like any other POW-- not to be swept off to some secret CIA black-ops prison to be tortured (which has happened dozens of times since 2001). Moreover, this bill also tells us that these persons are not to be tried in criminal courts, as they are Prisoners of War.
Then, as if directly referencing those American Citizens who were held by the Bush administration under suspicion of being terrorists or as enemy combatants, the bill HR. 1540 states this:

"SEC. 1022. <<NOTE: 10 USC 801 note.>> MILITARY CUSTODY FOR FOREIGN                           AL-QAEDA TERRORISTS.
    (a) Custody Pending Disposition Under Law of War.--            (1) In general.--Except as provided in paragraph (4), the Armed Forces of the United States shall hold a person described in paragraph (2) who is captured in the course of hostilities authorized by the Authorization for Use of Military Force (Public Law 107-40) in military custody pending disposition under the law of war 

            (2) Covered persons.--The <<NOTE: Applicability.>>  requirement in paragraph (1) shall apply to any person whose detention is authorized under section 1021 who is determined-- 

                    (A) to be a member of, or part of, al-Qaeda or an associated force that acts in coordination with or pursuant to the direction of al-Qaeda; and 

                    (B) to have participated in the course of planning or carrying out an attack or attempted attack against the United States or its coalition partners. 

            (3) Disposition under law of war.--For purposes of this subsection, the disposition of a person under the law of war has the meaning given in section 1021(c), except that no transfer otherwise described in paragraph (4) of that section shall be made unless consistent with the requirements of section 1028. 

            (4) Waiver for national security.--The President may waive the requirement of paragraph (1) if the President submits to Congress a certification in writing that such a waiver is in the national security interests of the United States.
    (b) Applicability to United States Citizens and Lawful Resident Aliens.-- 

            (1) United states citizens.--The requirement to detain a person in military custody under this section does not extend to citizens of the United States. 

            (2) Lawful resident aliens.--The requirement to detain a person in military custody under this section does not extend to a lawful resident alien of the United States on the basis of conduct taking place within the United States, except to the extent permitted by the Constitution of the United States."

(Public Law 112-81 Sec. 1022.)

So US Citizens and Legal Resident Aliens are not required to be held by the military-- meaning that they can be held in civilian prisons and tried in civilian criminal courts [or, they can be held in military prisons-- they are not required to be held by the military, but if deemed "necessary" they can be, if they are dubbed "Enemy Combatants"]. The Senate Committee on Armed Services is trying to make sure that "terrorists or enemy combatants" captured on the battlefields of Iraq and Afghanistan or in other foreign countries are held as Prisoners of War and are NOT allowed to be processed under the civilian legal system of the US.
It is only based on these unconstitutional laws (the USA PATRIOT Act and the Authorization for Use of Military Force of 2001) that the offending sections of HR. 1540 and similar bills have any relevance or validity at all, but their relevance is in terms of defining (limiting) the "special" powers granted to our President in the year 2001.


Tailored Specifically to Inconvenience Pres. Obama

Why this bill is specifically designed to prevent President Obama (whose campaign promises included closing Gitmo) from moving detainees currently held at the facility in Guantanamo Bay (with added emphasis):

 "SEC. 1026. PROHIBITION ON USE OF FUNDS TO CONSTRUCT OR MODIFY FACILITIES IN THE UNITED STATES TO HOUSE DETAINEES TRANSFERRED FROM UNITED STATES NAVAL STATION, GUANTANAMO BAY, CUBA.
    (a) In General.--No amounts authorized to be appropriated or otherwise made available to the Department of Defense for fiscal year 2012 may be used to construct or modify any facility in the United States, its territories, or possessions to house any individual detained at Guantanamo for the purposes of detention or imprisonment in the custody or under the control of the Department of Defense unless authorized by Congress. 

    (b) Exception.--The prohibition in subsection (a) shall not apply to any modification of facilities at United States Naval Station, Guantanamo Bay, Cuba. 

    (c) Individual Detained at Guantanamo Defined.--In this section, the term ``individual detained at Guantanamo'' has the meaning given that term in section 1028(e)(2). 

    (d) Repeal of Superseded Authority.--Section 1034 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (Public Law 111-383; 124 Stat. 4353) is amended by striking subsections (a), (b), and (c)."  

(Sec. 1026 of Public Law 112-81)

and:

 "SEC. 1027. PROHIBITION ON THE USE OF FUNDS FOR THE TRANSFER OR                           RELEASE OF INDIVIDUALS DETAINED AT                           UNITED STATES NAVAL STATION, GUANTANAMO                           BAY, CUBA.
    None <<NOTE: Khalid Sheikh Mohammed.>>  of the funds authorized to be appropriated by this Act for fiscal year 2012 may be used to transfer, release, or assist
[[Page 125 STAT. 1567]]
in the transfer or release to or within the United States, its territories, or possessions of Khalid Sheikh Mohammed or any other detainee who-- 

            (1) is not a United States citizen or a member of the Armed Forces of the United States; and 

            (2) is or was held on or after January 20, 2009, at United States Naval Station, Guantanamo Bay, Cuba, by the Department of  Defense."  

(Sec. 1027 of Public Law 112-81)

Similar sections have been added to the NDAA of 2013 (read Title X, Subtitle D). 

A reassuring addition to the NDAA of 2013 is this:

"SEC. 1029. <<NOTE: 10 USC 801 note.>> RIGHTS UNAFFECTED. Nothing in the Authorization for Use of Military Force (Public Law 107-40; 50 U.S.C. 1541 note) or the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81) shall be construed to deny the availability of the writ of habeas corpus or to deny any Constitutional rights in a court ordained or established by or under Article III of the Constitution to any person inside the United States who would be entitled to the availability of such writ or to such rights in the absence of such laws."

[a dissenting opinion to my analysis of this law can be found here]

So my personal objections to this bill LAW are simple and fundamental: 

• I do not believe that terrorism is an act of war. It is a crime.
• I believe that a terrorist act is nothing more than a politically or religiously motivated criminal act of murder (or mass murder, or attempted murder, or kidnapping, or hostage-taking) and sometimes may include conspiracy to commit those crimes.
• I believe that if a terrorist act occurs in a war zone- it is a War Crime and the perpetrators must be held as Prisoners of War and tried before a military tribunal, as well as charged with War Crimes under International Law.
• I do not believe that an "Authorization for Use of Military Force" counts as war, as only Congress can declare war (and Congress has not declared war since WWII). 
• The "War on Terror" is not really a war at all, and the legislation surrounding this crime enforcement is excessive and draconian.
• All provisions of the USA PATRIOT Act (Public Law 107-56) and all subsequent and related provisions and amendments must be repealed as they are unconstitutional.
• The Authorization for Use of Military Force of 2001 (Public Law 107-40) must be repealed, as it grants the President unbelievable power and breadth of action in a way that is also unconstitutional. The AUMF of 2001 broadly and vaguely expands the president's authority to use military force with little or no oversight and with no expiration date.
• Specific portions of this bill are intentionally designed, quite spitefully, to prevent the president from making simple policy decisions that would otherwise be well within his power and jurisdiction to make unilaterally.
• I also object to the bill on many other points, most broadly the total amount of money we're spending on defense, when some very specific no-strings-attached foreign aid programs and corporate regulations could work just as well in deterring terrorism for about 1/100th of the price and without all of the unnecessary death and dismemberment.

Go to thomas.loc.gov to search for public documents... or for current legislation with links to sending letters to your Congressional reps: www.opencongress.org - this also has a lobbyist activity tracker so you can see who is getting money in support of (or against) each bill currently being considered in Congress.

The Public Debt: A Menace to Society? - GD Part 4.2

In the wake of the Financial Crisis, the Private Sector struggled to regain its losses, while the US government sought to stimulate recovery with an array of efforts: 
Quantitative Easing, the Stimulus Package, TARP, extending the length of Unemployment Insurance coverage, extending the Bush Tax Cuts and instituting a Payroll Tax holiday, among other tactics.

But since the Great Recession that followed the Financial Crisis also created a reduction in income for the people, it consequently caused a revenue reduction for the government. This has led to massive government spending and growing deficits.

Is the United States going broke? 


Public Debt vs. Private Debt

Let's look at a graph of US Public Debt (AKA the National Debt or the Federal Debt) and Private Debt. The graph is plotted with the most recent data (2012) on the left, with data from each past year heading to the right. Dollar amounts are in billions, and the figures are adjusted for inflation (2011 dollars). The data was compiled from various documents available through the US Treasury Department and the Federal Reserve websites.

2012 figures for each category in the above graph:

Federal Government (US National Debt): $16.022 trillion
Domestic Financial Sectors: $13.855 trillion
State and Local Governments: $3.003 trillion
Non-Financial Business: $12.008 trillion
Households (Individuals): $12.945 trillion

Private Debt totals $38.808 trillion.
The total of all debt in the United States- both Public and Private- is $57.833 trillion.

Debt in the United States is a growing concern- both in the Public Sector and in the Private Sector of the economy. But is it a crisis? This is a big topic, so I'd like to split it up into smaller chunks.

With the “sequester” looming overhead and the constant battle in Washington, D.C. over spending and deficits, there is much talk about the National Debt (or the Federal Debt/Public Debt). This piece will concentrate on what the debt is, how it works, and if it really is a crisis-- or if it's just political grandstanding.

Federal Debt

While the Federal debt is the largest single category of the total debt in the United States, it's important to point out that about one-third of it ($4.85 trillion) is owed between different departments of the government- the Treasury Dept. calls these "Intra-Government Holdings" - of the remaining $11.6 trillion, more than half (about $6.1 trillion) is owed to US citizens and businesses or other domestic private interests who have bought Treasury Bills and US Bonds. The rest ($5.5 trillion) is owed to foreign countries. However, foreign governments owe the US government approximately $0.89 for every $1.00 of debt the US has borrowed from other nations.

So if the whole world were to decide to settle all international debt outstanding, the United States would be paying out about $5.5 trillion to foreign governments, but would be paid back around $4.8 trillion. The difference is then about $700 billion, or roughly the amount that the US spent on the Department of Defense in 2011.


Debt Growth

The growth rate of the debt is very concerning, especially when depicted this way:

When depicted in raw dollar amounts, not adjusted for inflation, the National Debt looks quite daunting.

However, it's not really relevant to depict the National Debt in non-inflation adjusted raw dollar terms. A better way to judge, both for historical context and in terms of the US's ability to pay, would be as a percent of GDP.

Note: this next graph is plotted in the opposite direction.

As you can see, in terms of debt as a percent of GDP, the US was in a similar situation following World War II. 

Read from 1929 (far right) to 2012 (far left), the above graph depicts Federal Debt (the National Debt) relative to the size of the US economy. That big spike on the right-hand side is the result of World War II spending.

Following World War II, the US had a drastically expanded industrial sector and a labor force specifically trained to work in it. The US was uniquely positioned to become the greatest economic power in the world in terms of manufacturing and finance. 

The rest of the industrialized world was more or less in shambles, and the United States was able to swap debt around as it funded the reconstruction of Japan and large swaths of Europe.

The above graph kind of puts a different spin on the Reagan campaign leading up to the 1980 Presidential Election. Reagan criticized Carter for being a "big spender"- increasing the budget deficit and National Debt- which seemed like a big deal since the US was in the middle of a recession. Yet since 1932, the National Debt had been lower as a percent of the GDP only twice before- in 1979 and in 1974. Ironically, Reagan then went on to triple the National Debt in the subsequent eight years.

Today, much of the US's manufacturing has moved overseas and the government's fiscal gains from the economic boom of 1950's-1970's were virtually erased by what is known as the Reagan Buildup. 

While headway in reducing the debt was begun by the government during the late 1990's, the US soon had a series of economic and political crises. 

The 2000's brought them on relentlessly: the Dot-Com Bubble bust, followed by the September 11th Attacks, more than a decade of conflict in Afghanistan and Iraq, the Financial Crisis of 2007, TARP & other subsequent government bailouts, large perennial expenses like the War on Terror, the newly created Department of Homeland Security, and now the Great Recession-- which seems to be dragging on and on despite everyone's best efforts.

From a purely capitalist perspective, the main focus for a recovery for both the economy as a whole and the National Debt (if it really is a problem at all) should be to rebuild the US manufacturing base and to implement policies that encourage banks to lend, employers to hire, and individuals to spend their money. However, the two major capitalist political parties in the US differ significantly in what those specific policies actually are, which is why the US is facing the greatest partisan gridlock in Washington D.C. since the end of World War II.

US Federal Government Budgets

Quickly, so everyone's clear:

Revenue is how much money the government takes in each year from taxes, tariffs, and other payments. 

Expenditures are what the government spends.

The Deficit is roughly the amount a government has to borrow (usually by issuing bonds) to cover expenditures that exceed revenues each year. There are other financial reasons why a government may issue bonds and borrow money, but we're not going to discuss those now.

The National Debt (the Public/Federal Debt) is the running total of how much debt the government has outstanding/unpaid. The only time the US ever fully paid-off its debt was in 1835. It began borrowing again within a year.

The short bars on the graph between 1976 & 1977 correspond to a period known as "TQ," or Transition Quarter- and this represents a time when the beginning of the Federal Fiscal Year was moved from July 1 to October 1.

In the above graph, which is adjusted for inflation (billions of 2011 dollars), the blue bars represent Revenue (how much the government collected in taxes and other sources), the green bars represent expenditure, and the downward-facing yellow bars are the deficit for each year (yellow upward facing bars signify surpluses). 

The moderate yellow streaks on the far right are WWII spending. The huge yellow bars on the left represent deficit spending after the 2007 Financial Collapse. 

It looks pretty bad until you draw the same data as a percent of GDP:

So now we can see that the recent deficit spending, while immense, is not really on par with deficit spending during World War II. As long as the government can get a handle on its revenue/spending balance within a few years, the US will likely recover, as it has a vastly increased ability to pay compared to the post-WWII era debt-to-GDP ratio.

Wage Stagnation & Federal Revenues

The government gets its money primarily from the people. US citizens finance the government through taxes and the purchase of US Bonds and other instruments. Thus, if the people have less money, the government will very likely have reduced revenue as well.

Here is a graph depicting GDP per Household and Median Income from 1967 to 2011:

GDP per Household has nearly doubled, while Median Income has increased only about 19% since 1967.

We can see above that the blue line (GDP per Household) has been increasing at a higher rate than the green line (Median Income) over this period.

This seems to indicate that the total dollar value of goods and services the US produces has increased more rapidly than the earnings workers take home.

The above shows GDP per capita (the blue line) and Federal Budget Revenue (green bars), again running from 1929 on the right, to 2012 on the  left.

There are actually two axes on this graph, since the GDP is actually much larger than the entire Federal Budget, I had to scale these so we can see the direct correlation between GDP and Federal Revenue. 

Let's have a closer look at just the last 35 years:

What exactly is happening? Mainly, since wages haven't increased with inflation and top income tax rates were slashed by both Reagan and George W. Bush, there have been long-term reductions in Federal Revenue, even though there has been an increase in GDP. 

The only point after 1984 in which the correlation between Federal Revenue and GDP returned to normal was between 1998 and 2001, when unemployment was very low and tax rates were moderately higher.

In FY2011, the government instituted a Payroll Tax holiday, reducing rates temporarily from 6.2% to 4.2%. The Payroll Tax accounts for all funds deducted from a wage-earner's paycheck for Social Security, Medicare and Unemployment Insurance. 

This was a great relief for many wage earners who got to take a larger portion of their income home, and was meant to stimulate spending. There is disagreement over whether it had the desired effect or not. The tax holiday expired in 2013.

Together with the Bush Tax Cuts, the Payroll Tax holiday, increased defense spending (since FY2000 the Defense Department's budget nearly tripled) and the Financial Meltdown/Great Recession, the US government has experienced a rapid increase in annual expenditures but a large net reduction in revenue.

In FY2000 expenditures were $2.3 trillion while revenues were $2.6 trillion-- and the budget ran a $300 billion surplus (in 2011 dollars). Expenditures in FY2010 were $3.5 trillion, while revenue had sunk to $2.16 trillion.

The net reduction in revenue by 2010 was over $500 billion while expenditures increased by $1.2 trillion, leaving a $1.4 trillion deficit. The next year, FY2011, was only slightly better:

US Federal Budget expenditures enacted for FY2011 were $3.63 trillion, but revenues totaled only about $2.3 trillion, leaving a deficit of $1.3 trillion.

Seemingly, the key to making the US Federal budget balance without significantly raising taxes is to somehow encourage wages to rise at pace with GDP-- or at least with inflation. That way, the bulk of the population would pay the same rate in taxes but ultimately provide more revenue for the government while reducing government expenditures.

Discretionary Spending amounts to about half of total Federal expenditures each year. FY2013 is expected to run a deficit under $1 trillion, for the first time since the Financial Crisis.

Does China Own the United States?

I hear a lot about China from pundits and fanatics. China does not "own" the US. They have lent the US government around $1.2 trillion- the largest amount of any single foreign government (although Japan is a very close second, at $1.1 trillion), and it would be crippling for the US to have to pay it all back at once, but:

#1- The debt to China is not a significant amount of the total US National Debt to begin with (only about 7%), and;

#2- That's not how it works. China owns a significant amount in US Bonds and Treasury Bills, which must mature to their term. The only thing the US has to worry about is issuing the annual interest on the bonds. They cannot be paid-out on demand. If China was interested in "cashing them in," they could be sold to other nations or investors. 

Sources: 
http://treasurydirect.gov/NP/BPDLogin?application=np
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

In the aftermath of World War II the US dollar became the number one global reserve currency. Countries all over the world use the dollar to pay debts to each other, most commodities are priced and traded in dollars internationally, and the value of many foreign currencies are pinned to the US dollar. 

It does not serve the interests of any nation to allow the United States to fail or to otherwise default on its debts. Nobody wants that-- especially not China; we're their biggest customer. If the US were to fall into financial ruin, it would likely ruin the Chinese economy as well.


The Federal Debt: A Menace to Society?


Despite the whining and grandstanding in Washington D.C., the US government is not about to go broke. Is it heading down an unsustainable path? Absolutely. But it's not simply all about spending, it's how the government spends the money, coupled with an insufficient revenue stream; the budget gap needs to be closed. In terms of international finances, however, it's doing alright for now. 

It could be a disaster if the US's credit rating was downgraded (like it was following the Debt Ceiling debacle last year), if the international community lost faith in the dollar, and/or if the US was otherwise forced to borrow at progressively higher and higher interest rates.


Further, and this may seem reckless, but as a last resort the government can always print more money. On the one hand, inflation is bad because it can stagnate wages while raising consumer prices- but on the other hand, if interest rates on government bonds are low enough (and they've been just about as low as they can get for ten years), inflation can outpace the interest on the government's debt, essentially amounting to negative interest.

However, in the case of the most recent Financial Crisis (as with the Great Depression), the issue of concern has been to avoid massive deflation. The US government has responded to this crisis by buying up large quantities of financial assets from banks, which can shore up the banks' short-term position and spur lending while indirectly increasing the money supply without affecting interest rates. See: Quantitative Easing.

Sadly, the US Federal Budget continues to grow, no matter who is president, no matter what party is in office, no matter who is sitting in Congressional seats-- at a rate usually between 3% and 7% per year. Statements claiming otherwise are just political posturing.

In fact, the only year since FY1965 that the US Federal Budget shrank from one year to the next was FY2010, and that was mostly because TARP (read as: an extra $700 billion) appeared on the FY2009 budget.

The United States government's deficit spending is a concern, but it is not yet a crisis. In times of economic turmoil, deficit spending can ease the woes of wage earners and stimulate economic growth by contributing directly to the GDP through contracts to defense companies, providing social insurance benefits that ensure consumers spend money into the economy (even if they're still unemployed), and infrastructure development that includes big payouts to private contractors. 

All of these government actions create a multiplier effect in which the economic output is greater than the total dollar amount of input. Government spending causes growth in the economy (especially through infrastructure projects), which generally causes companies to hire more employees, who earn more money (increasing Federal Revenue) and then spend most of it, increasing economic activity, which prompts businesses to hire more employees... and so forth.

Further down the road, if the US can make some policy changes that further economic development (including encouraging wage growth that at least keeps up with inflation) and if the government can increase its tax revenues without burdening the Middle Class and lower classes, there is a good chance that the current substantial deficit spending and the National Debt in general will not be a problem at all.

Exactly how to do all of these things is another matter-- it is a complicated macro-economic problem, and we'll get back to it later. Meanwhile, here's a great video on the topic of government debt by John Green of the vlogbrothers.